The Investment Industry Regulatory Organization of Canada (IIROC) announced it has accepted a settlement agreement, with sanctions, between IIROC staff, Cameron Prange and Kingsdale Capital Markets Inc., now known as Regent Capital Partners Inc. (In January 2019 the current owners of Regent Capital purchased a majority interest in Kingsdale Capital. All of the matters at issue occurred when the dealer operated as Kingsdale Capital.)
In the settlement agreement, Prange and the company admitted to failing to maintain and enforce its policies and procedures regarding the receipt and containment of confidential information about the firm’s corporate finance activities.
“The respondents did not follow the firm’s policies and procedures regarding the receipt and containment of confidential information or take steps to ensure that other employees did so,” say the authors of IIROC’s settlement agreement with Prange and Kingsdale. Failing to follow those procedures resulted in inadequate supervision of trading in issuers who ought to have been on the company’s gray list.
In addition, the company, while in early warning 2, filed weekly capital reports without maintaining adequate documentation to support its estimates. The company also made a payment of more than $10,000 to Lakeridge Capital, its U.S affiliate, to satisfy that company’s minimum capital requirements, without seeking approval for the transfer from IIROC. The regulator ultimately learned about the transfer to Lakeridge from the U.S. Financial Industry Regulatory Authority (FINRA), Lakeridge’s U.S. regulator.
IIROC’s early warning system is used to identify and facilitate monitoring of dealer member who are in financial difficulty. When a dealer triggers early warning, it is automatically subject to enhanced reporting requirements to facilitate monitoring by IIROC.
In its settlement agreement, IIROC says Kingsdale remained continuously in early warning 2 from November 2015 until March 2017, and as such, was required to file weekly capital reports. “If the weekly capital reports do not contain an accurate estimate of the dealer member’s capital position, (IIROC) has no means of monitoring precarious firms in between their monthly financial report filings,” they write. The regulator adds that Kingsdale was unable to produce documentation to support the reports, frustrating IIROC’s ability to adequately monitor the firm’s financial circumstances.
Pursuant to the settlement agreement, Prange has agreed to pay a fine in the amount of $40,000. He is also permanently barred from obtaining registration with IIROC as an Ultimate Designated Person, or any other supervisory role for which registration is required. Kingsdale, meanwhile, now known as Regent Capital Partners, agreed to pay a fine in the amount of $45,000 and costs of $5,000.
